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Digital Single Market

Philippe Kern

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The European Commission has rightly identified the development of the digital single market as a priority. Indeed the digital economy promises a new economic system which offers the possibility to narrow the income divide, democratize the global economy, improve education, quality of life and create a more ecological sustainable society.

The 5 main challenges to the Digital Single Market for European CCIsSo far the digital economy has caused havoc in a number of culture and creative industries in particular music, publishing and newspapers, costing thousands of jobs to the creative class: journalists, writers, publishers, musicians, artists, record companies. Consumers are sharing their music files or other information goods providing content for free to digital network operators which happily charge for internet connections. The film and TV industry is fighting hard to avoid the “Napsterisation” of the music industry. All these industries are the emanation of local cultures. They are often directly or indirectly state subsidized to enable the expression of local identities[1].1. Reduction of the benefits of localityDigital networks reduce the benefits of locality which is the ability for the local producer of content to offer something better or cheaper in the vicinity, thus enabling the market economy to pick up many winners. What advantage is left for the local producer or distributor if the digital economy can produce at no cost or can adjust to offer the lowest price? Today a dominant operator is in a position to monitor the price of cultural goods sold anywhere to make sure it is never undersold.

In the digital age musicians are condemned to continue making a living while they are still capable of performing. They are obliged to live a real-time economic career (this means they are no longer paid for past recordings and performances) whilst a search engine or social network companies will make millions from material that is copied or recorded[2].2. Dominant behaviours in the marketLarge sectors of creative industries are disappearing almost unnoticed. Because they are at the heart of local cultural expressions and sensitivities their ghosts come for revenge, killing any remaining empathy for the European project.

The culture and creative industries should not fall victim to the defence of freedom of information and access to knowledge – the arguments used by network operators to justify economic behaviours that reinforce dominance. Information is power, digital networking enables consolidation of extraordinary power. Although new technologies have no doubt multiplied the way culture is accessed and produced, digital operators have been de facto granted an exorbitant means to dictate prices, determine access (to content and in particular cultural content), spy on people’s behaviours whether buying habits, cultural tastes or social feelings.3. A Digital Single Market that operates essentially for international productionsThe right balance needs to be found which also takes into account Europe’s specifics whether in consideration of net neutrality, copyright, privacy or telecom regulation.

Despite globalization European content production still caters mainly for local linguistic markets. The unification of these markets into a single one is extremely challenging. Regulatory attempts aimed at encouraging cross-border services have largely failed to change the market structure (notably the AVMS or the Conditional Access directives). The EU has been better in defining a global position in defence of intellectual property rights (WTO and WIPO Treaties) as well as in supporting the objective of cultural diversity as a matter of legitimate public policy (2005 UNESCO Convention).

Today the single market operates largely to the benefit of Anglo-American language and hit-driven productions. Europe is the most creative continent with cultural and creative production (in fashion, design, music, cinema, publishing, performing arts, heritage and videogames) admired throughout the world. It remains that this incredible diversity and excellence in production has difficulty reaching consumers outside their country of origin. Europe’s culture and creative industries market share in the world market are dismal whether in North America or in Asia, except in the realm of a limited number of luxury brands (in fashion and the car industry).

This situation combined with the control of digital distribution networks by Apple, E-Bay, Amazon or Google (Tencent and Alibaba in China) makes Europe very vulnerable. Europe’s sphere of online influence is under threat, increasingly limited to the presence of its telecom equipment manufacturers: Ericsson and Alcatel-Lucent.4. A Digital Single Market that works for artistsEuropean policy has historically focused its attention on R&D and standardization in hardware with notable initial successes in mobile telephony (Nokia, GSM standard) or consumer electronics (Philips, Thomson). This is now in the past. It shows that an effort focusing only on technology is not sustainable. The EU requires a new ambition and vision to cater for the new digital age and converging industries. This ambition should not be limited to encouraging investment in broadband infrastructure especially if the latter means excoriating copyright based industries to capture new markets at lower costs. The building of a digital economy is the opportunity to balance the power of network operators on one hand and content providers on the other.

It is the politics and economics of digital networks that will determine how new capabilities translate into benefits for artists and the creative sector but also ordinary people. If the system destroys traditional mechanisms for cultural production and the perspective to make a living from music, film, writing or photography, at least it is important to monetize the use and exploitation of information goods to remunerate those that are at the very origin of this creation.

Commissioner G. Oettinger in charge of the digital market portfolio including information technology as well as copyright industries has expressed the view that digital companies should contribute to the funding of European content for using such content. Whilst the proposal is worth exploring, will it be sufficient to ensure Europe’s distinctive presence in the digital economy?

Europe is no less creative than North America, on the contrary. However in the digital age European creative industries are suffering from distribution infrastructures predominantly aimed at linguistic and local markets. Furthermore the fragmented and atomized creative industries are ill-equipped to influence the complex EU decision-making process and to make known their views or participate in EU Research Programs. Capacity building for interaction with the sector at European level is urgently required.5. Putting Europe’s cultural diversity at the center of the EU projectThis industry is crucial to the continent’s identity as well as economic and social well-being. It is the expression of Europe‘s varied cultures, creativity, memories and values. It epitomizes Europe’s excellence and “savoir faire” nourished by its tradition to valorize quality of life as well as local singularities and prides. The European project shows that diversity is a factor of progress, not confrontation[3].

Whilst the Single Market remains a distant dream for most of Europe’s creative industries the former has also failed to create affinity and cultural understanding between Europeans due to its inability to disseminate the immaterial and the meaningful. This contributes to distancing citizens from a European project without soul[4].

Five steps towards a DSM that benefit European CCIs:1. As a minimum the European Digital Agenda should spell out as an objective the promotion of cultural diversity. The impact of Single Market regulation should be assessed with respect to this objective.

2. The EU needs to promote its creative excellence with a view to structure markets (including the global digital market) by showing the best in its local ranks in relation to festival, art fairs and biennale, culture, fashion and sport events, professional prizes (literature, design, films, music, fashion, architecture).

3. Sometimes only a collective effort will enable the branding of Europe’s creativity and ensure its relevance to non-local network operators. The EU needs to encourage collective selling or promotion (like European football competitions with UEFA or independent music with Merlin[5]) to reach global audiences.

4. It is time to review national policies aimed at supporting the content production sector and consider the pooling of resources for well-defined European objectives such as the dissemination of European richness and quality products. It is a matter of relevance and survival. Today the most heavily populated country and the largest economy in the world, China, hardly gets to see anything “European” on tablets, mobile phones, computers, in theatres or on TV screens. Europe is increasingly known for its renaissance architecture, its romantic streets and rich museums. It is valued for its past, not for its modernity.

5. An imminent reform to the copyright system has been announced. The direction for such a reform should be carefully considered taking into account the role of this legal institution in promotion the development of IP intensive industries.The battle over the digital single market is opposing two visions:– A vision where the EU is simply a market for “world culture” – the culture of the mainstream.– A vision whereby the EU is a distinctive space that nurtures the circulation of the diverse cultural expressions, the fabric of Europe.Culture is one of Europe’s most valuable resources[6] to innovate. Let’s make sure that the Digital Agenda and the European project make the most of it.________________________________________[1] EC research shows that the culture and creative economy represent at least 6 million jobs and 4% of EU’s GDP.[2] On average, a record label on Spotify would receive between $0.006 and $0.0084 per stream. Or to put it another way: one million streams would give a label $6,000-$8,400. Source FT 24.10.2014 http://www.ft.com/intl/cms/s/0/59e6e6d6-5a49-11e4-8771-00144feab7de.html#axzz3J23qt07W[3] A distinctive vision from the one proposed by S.Huntington, Clash of Civilizations, Simon and Shuster.[4] http://www.keanet.eu/rendons-l-europe-empathique-et-altruiste-2/[5] FT 11 November 2014 You Tube sign with Indie Labelshttp://www.ft.com/intl/cms/s/0/ff6bf816-699a-11e4-8f4f-00144feabdc0.html#axzz3J23qt07W[6] Europe is the birth place of humanism, renaissance, cities, enlightenment, democracy, sculpture, printing, classical music, opera, haute couture, fashion, design, contemporary art, the web, MP3, cinema, literary fiction….